Wealthcheck’s rural foray a mix of crops, cattle

The water runs through it ... the Woodbine aggregation, two south Queensland properties which span 9571 hectares and were amalgamated by a private farmer, were bought for $20 million.
AFR

by
Ben Wilmot

Rural specialist Wealthcheck Funds Management has bought two farms in southern Queensland for just over $20 million and will install listed giant
AACo
to run them.

The acquisitions are the first plays by the group, which is assessing a pipeline of farm property worth about $300 million.

Wealthcheck director Sam Mitchell said: “We’ve been speaking with some very large institutions."

Some of these properties are valued at up to $150 million and Wealthcheck is targeting property that appeals to corporate tenants.

The group was looking for properties offering economies of scale and where there might be some value through upgrading, Mr Mitchell said.

Wealthcheck’s Queensland Rural Trust, a closed-end vehicle, has bought two properties near St George – known as the “Woodbine" aggregation – that were amalgamated by a private farmer.

The farms were bought for $20 million and water licences for $820,000. They span 9571 hectares, of which 1100 hectares is irrigable, 4000 hectares is available for dry-land cropping, and 3921 hectares is for grazing and storage.

They have been developed for irrigated cotton production and also allow for alternative crops such as wheat, barley, chickpeas and sorghum. The balance is grazing land and carries up to 1000 breeding cattle.

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There are water storage dams and water licences totalling 2026 megalitres.

AACo is best known for running more than 600,000 head of cattle, but its farming unit operates 18,900 hectares of dry-land cropping and 2300 hectares of irrigation on four Queensland and Northern Territory properties. The listed group’s lease of the Wealthcheck property fits with its diversification strategy.

The 10-year lease offers rent starting at 6 per cent of the property value, with 2 per cent minimum annual CPI increases and a market review after five years.

The Wealthcheck trust will also provide capital for additional land development. It will be geared at 50 per cent and about $13.813 million of equity is being sought from investors.

Wealthcheck projects an internal rate of return of 17.5 per cent, with an income yield of 9.88 per cent, for its wholesale investors.